Emphasizing Category Management

Convenience Store Decisions‘ annual Category Management Outlook issue is routinely one of my favorite issues of the year because it gives the CSD staff an opportunity not only to analyze the industry’s performance over the past 12 months, but to forecast the sales trends retailers can expect to see over the next 12 months.

It was relatively easy last year to predict that foodservice would continue climbing up the sales chart, but we were also accurate in reporting strong growth in frozen beverages, craft beer and cigars.

For the upcoming year, categories with notable growth projections include smokeless tobacco, coffee, iced teas and commissary-prepared, wraps and salads.

While keeping ahead of the trends is important, the key takeaway from this Category Management Outlook issue is that all retailers must place a heavy emphasis on category management. With the average convenience store stocking thousands upon thousands of SKUs, real time scan data must be used to improve all phases of store management.

It is important to develop a system to distribute the reports to all of the members of your team that have a need for the information, but avoid analysis paralysis. The information obtained from the scanning reports does little good if there is not a structure to utilize the information.

Focusing on Customers Since consumer behavior and motivations can differ dramatically, the effectiveness of marketing should differ systematically across each category.

These issues are key to any formal category management process where retailers must define the role that each category plays in the overall store portfolio. Effective category management requires that retailers understand where to allocate scarce marketing resources in order to get the biggest bang for the buck.

This is one area c-store owners have typically excelled. While the industry is a lean and battle-tested group that has learned to survive the onslaught of competition targeting its market share both in-store and at the pumps, this prolonged weakened economy has stirred creativity and unique operating solutions like never before. For many operators the recession is just another obstacle they’re forced to overcome with the same patience and poise they displayed while taking on tobacco regulations and excessive credit card fees.

In fact, among many retailers there is a certain degree of optimism that this industry has matured and will be a dominant force across all retail channels as the economic situation brightens. Who knew market volatility would be the edge c-store owners needed to strike fear into the hearts of drugs stores and supermarkets?

But even the brighter days ahead will be filled with uncertainty. The National Restaurant Association predicted 25% of restaurants that currently exist will be gone within the next 18 months. Currently, there is one restaurant for every 110 households in the U.S.

Focus on improving the customer experience. “If you ask someone about a good experience they had at a restaurant, they’ll almost never tell you about how good the food was; they’ll tell you how they were made to feel,” said Jeff Joiner, a consultant from MVP Sales. Focusing on what feelings you want to convey as a foodservice operator—quality, consistency, image, culture, etc.—is more important than the actual food, he added, using Chuck E. Cheese’s as the perfect example.

“They are hugely profitable, and it’s not because of their pizza,” Joiner said. “They sell entertainment and fun.” Keep that in mind when planning for the future.

“The average corporate executive spends 2% of time actively thinking about the future,” Joiner said. “That is simply not enough. Force yourself; discipline yourself on figuring out where you want to be in five years. That’s the best way to avoid getting complacent.”

In other words, your future begins today.

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